When it comes to U.S. trade policy, so far, Joe Biden has continued Trump administration policies that economists and other analysts found to be harmful and misguided. Biden’s rhetoric is less confrontational toward other countries and foreign leaders, but the unwelcome news for companies and consumers is the new president’s substance on trade has remained “America First.”
Beauchamp quotes Tufts University professor Daniel Drezner: “It’s totally America First. I don’t think they’re more protectionist than Trump per se. But they’re not less either.”
When one examines Donald Trump’s trade record, it’s unclear why the Biden administration finds the policies appealing. (A new video from the National Foundation for American Policy details the shortcomings of an “America First” trade policy.)
First, Trump’s trade policies were harmful to consumers. As economists know, tariffs are another word for taxes. The Congressional Budget Office has calculated the Trump tariffs cost the average U.S. household more than $1,200 a year. Since Biden has continued the tariffs, at some point, they will be called the “Biden tariffs,” and the cost to U.S. households will be similar.
Second, Trump’s policies, particularly the tariffs on steel and aluminum, cost jobs in manufacturing. “Tariffs on steel may have led to an increase of roughly 1,000 jobs in steel production,” according to economists Lydia Cox of Harvard and Kadee Russ of the University of California, Davis. “However, increased costs of inputs facing U.S. firms relative to foreign rivals due to the Section 232 tariffs on steel and aluminum likely have resulted in 75,000 fewer manufacturing jobs in firms where steel or aluminum are an input into production.”
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Some estimates of job losses in manufacturing are higher. In 2019, the St. Louis Post-Dispatch reported on the layoffs that the steel tariffs caused at Mid-Continent Nail in Poplar Bluff, Missouri: “The plant, the largest U.S. nail manufacturer, was hit hard by President Donald Trump’s steel tariffs . . . Its sales fell by 60%, it’s been losing money, and employment fell from more than 500 last June to fewer than 300 now.”
The irony is that two years after the Trump administration levied the tariffs, the U.S. primary metals industry employed only about 2,500 more people than when the tariffs were announced, according to the Bureau of Labor Statistics, as noted by Shawn Donnan of Bloomberg. In March 2018, 376,000 people were employed in primary metals, a number that increased to only 378,500 by March 2020.
Third, the tariffs on China hurt U.S. farmers—leading to more than $28 billion in government aid from taxpayers—and harmed the stock value of many companies. “We find that U.S. and Chinese tariff announcements lowered U.S. aggregate equity prices in our sample of close to 3,000 listed firms by 6.0 percentage points: a $1.7 trillion reduction in market value for our sample of listed firms,” according to research by Mary Amiti, an economist at the Federal Reserve Bank of New York, and Columbia University economists Sang Hoon Kong and David Weinstein. The study noted that 3.4 percentage points of the 6.0 percent decline in equity prices “can be attributed to the common effects” [effects that matter in general to companies] and “2.6 percentage points can be attributed to the differentially poor performance of firms importing from, exporting to, or selling in China.”
The Trump administration’s trade tactics harmed consumers and companies and failed to achieve their stated objectives with China or America’s other trading partners.
“President Trump is the worst president on trade policy in at least 90 years,” according to Bryan Riley, director of the National Taxpayers Union’s Free Trade Initiative. It remains a mystery why the Biden administration wishes to continue policies that were unsuccessful and harm Americans.